Looking at the utter destruction across Jersey shore and Manhattan that is now going on TV, one can only wonder how severely affected were New York / New Jersey harbors. These are extremely important harbors for US, the East Cost and the lifeline of New York metropolitan area. The costs of this storm might not be only the clean up and the recovery of infrastructure. It might be about momentum as well. How deep were and will be the cuts to New York economy? We will see...
Wednesday 31 October 2012
Tuesday 30 October 2012
Please, tell me!
Why does Portugal need to wait another year for cutting €4.000 million to public expenses? They are one of the 2 main reasons for the Portuguese deficit (the other one is lack of global competitiveness). Why don't we start putting forth those measures immediately (I have been saying the same thing since 2010, so...) instead of raising taxes so much and killing an economy? We should be decreasing the terrible weight of public sector in the economy (around 46%), not the opposite (as will happen next year, through reduction of private consumption and close to 0 private investment).
If anyone has a decent answer, please, tell me!
Monday 15 October 2012
Are Portuguese only complaining about the economy?
I don't think so. They are also widely complaining about corruption.
The truth is Portuguese feel corruption crippled their economy and takes a large part of the blame of the current economic situation. More than that, I guess most Portuguese aren't seeing significant work is being done in this area - actually, the fact the Governmen is failing to deal with the corruption charges to some of its members only adds to that feeling.
The huge number of redundant highways (with very heavy contracts behind them), the shady connections to private universities, the number of public works done by municipalities without any reasonable benefit (vs the cost), the planning for high-velocity trains and airports, the schemes with European funds that were diverted from meaningful investment, the unreasonable benefits for public leaders (members of parliament, managers of public foundations without any meaningful work done, sub-secretaries of state and public consultants with no curriculum but being part of one of the major parties)... and the list goes on and one... I feel Portuguese are really sick of this - and it is at the root of their protests.
Corruption is a must tackle in this period of turbulence!
Good news for the Portuguese language
When a reference newspaper, like the New York Times, announces plans to establish a Portuguese language edition (focused on Brazilian readers), that can only be considered good news! And a sign of the growing importance of Brazilian economy in the world.
Friday 12 October 2012
Nobel Peace Prize 2012 - the European Union
It totally deserves it! For my generation, it is impossible to think of war in Western Europe. Still, that was the bread and butter of the continent for endless centuries - until 1945, a full generation would not pass without having lived through a war. The European Union (and NATO as well, actually) is the main responsible for that achievement. The European Union gave us prosperity, but, most of all, it gave us peace.
And the time is right for such a recognition. Because many might doubt its importance, in the midst of all the turbulence that goes around it. As so, let me also laud the incredible sense of opportunity of awarding such a prize right now - we, Europeans, should remember that we all live together in peace because of UEs work. We should remember its importance, even when it (and we) face huge challenges now and ahead. Let's work to ensure we rise to them!
Thursday 11 October 2012
Major disappointment
A terrible increase in taxes to fund an unproductive public system, that will only deepen recession and escalate a vicious cycle nobody believes in. Neither do I. This is the opposite of what we should be doing. It only shows that politicians are terrible economists. And that in Portugal, Politics can only attract mediocre economists.
Supporting (and challenging) João Salgueiro's words
Public administration should be streamlined - so, simplified and implying headcount reduction (which would lead to less burocracy). But, and full supporting João Salgueiro there, we need to do these while we put forward a growth strategy based on productive investment - which would allow to reduce unemployment (that would rise initially due to public administration layoffs) - and to provide the conditions for that. The only way to control deficit is to be more productive while controlling unnecessary spending. We need to raise GDP while spending less. But we need to walk the talk - and we are still far away to understand that we need both streams to be successful.
Tuesday 9 October 2012
Austerity multipliers failing
According to the IMF, each "austerity euro" is having an impact of €0.9 to €1.7 in the economy - versus the €0.5 initial estimated. This is actually meaning a deeper recession than initially forecasted, generating further public spending deficits.
I am not a big supporter of some IMF measures - they actually have a very long story of wrong predictions and policies. But, this time, I think IMF might only have been naif. Because the fact is that it was probably predicting that Governments would "austerize" spending fats - while, actually, as many of them lack the political ability and courage to do it, they are mainly raising taxes (which has a stronger impact on consumption and hence on GDP). As so, I don't think that it was only a bad prediction from the IMF - I think most of the impact comes from the fact that Governments are implementing the wrong measures.
That would be good news
Portuguese economy has 2 problems: a public spending one (the famous public deficit) and an economic one (lack of productivity and competitiveness). Attacking the public deficit by not tackling on expenses and just raising taxes doesn't solve the first problem and only deepens the second one. That is why I am against the current solution of raising income taxes (it will kill our economy) and I am hopeful on the news that the Finance Minister will try to reduce that increase and shift correction to the spending side of the equation. I will be looking forward to this.
Thursday 4 October 2012
It won't work
The worst point on the "enormous tax increase" in Portugal is that nobody believes it will work. The contraction on spending will be too high and we will only be supporting noneffective public administration spending - it actually is a very communist scenario, and we all know how well that worked... The only solution for the Portuguese problem is to attack the problem at its root (strongly cutting public daily spending) and to generate and follow a growth strategy. That is not being done. And that is why Portugal will fail. Sadly true.
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